A North Carolina court ruled Nucor’s property insurers must cover over $14 million in industrial losses, despite insurer arguments over policy exclusions.
A North Carolina business court recently resolved a major insurance dispute between Nucor Corporation and a group of commercial insurers, including Aspen Specialty Insurance Company, Liberty Mutual, Zurich American, and others. The decision, issued October 31, 2025, clarifies how courts may interpret property and equipment breakdown coverage for large industrial claims.
The dispute arose after a 2017 accident at Nucor’s Louisiana steel facility, where a malfunction in the production process caused approximately 2,400 metric tons of uncoated iron ore pellets to solidify inside a reactor. The incident forced a shutdown, reactor repairs, and led to Nucor claiming more than $14 million in losses under both property and equipment breakdown insurance policies.
The insurers denied coverage. The property insurers argued that exclusions for faulty design and inherent or latent defects barred the claim. The equipment breakdown insurers said the event did not meet the policy’s definition of a “Breakdown,” which required direct physical loss or impairment to covered equipment.
Judge Julianna Theall Earp’s decision focused on the specific policy language. For the equipment breakdown policy, the court found that Nucor’s loss did not qualify as a covered “Breakdown.” The court determined the incident resulted from intentional actions by Nucor personnel, not a fortuitous event or direct physical loss as defined in the policy. The court granted summary judgment to the equipment breakdown insurers, finding no coverage under that policy.
The outcome was different for the property insurance. The court ruled that Nucor’s manuscript property policies did provide coverage. The judge rejected the insurers’ interpretation of the faulty design and inherent defect exclusions, finding that these exclusions only applied to the cost of fixing the defect itself, not to resulting physical loss or damage. The court noted that the reactor was physically altered and required substantial repairs, which constituted a physical loss under the policy.
The court denied the property insurers’ motion for summary judgment and granted summary judgment in favor of Nucor, declaring that the property insurance policies covered the loss. The court also denied a motion to strike a declaration from a Nucor technical manager, finding no contradiction with his deposition.
This decision underscores the importance of clear policy wording and careful application of exclusions, especially in custom policies for large industrial clients. The case provides insight into how courts may approach complex commercial insurance claims and reinforces the need for precise drafting and review of policy terms.
